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[Federal Register Volume 79, Number 147 (Thursday, July 31, 2014)]
[Rules and Regulations]
[Pages 44314-44316]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-17942]

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DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Parts 225 and 236

RIN 0750-AI33

Defense Federal Acquisition Regulation Supplement: Use of 
Military Construction Funds in Countries Bordering the Arabian Sea 
(DFARS Case 2014-D016)

AGENCY: Defense Acquisition Regulations System, Department of Defense 
(DoD).

ACTION: Interim rule.

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SUMMARY: DoD is issuing an interim rule amending the Defense Federal 
Acquisition Regulation Supplement (DFARS) to implement sections of the

[[Page 44315]]

Military Construction and Veterans Affairs, and Related Agencies 
Appropriations Act, 2014, that restricts use of military construction 
funds in various countries, including countries bordering the Arabian 
Sea.

DATES: Effective July 31, 2014.
    Comment Date: Comments on the interim rule should be submitted in 
writing to the address shown below on or before September 29, 2014, to 
be considered in the formation of a final rule.

ADDRESSES: Submit comments identified by DFARS Case 2014-D016, using 
any of the following methods:
    [cir] Regulations.gov: http://www.regulations.gov. Submit comments 
via the Federal eRulemaking portal by entering ``DFARS Case 2014-D016'' 
under the heading ``Enter keyword or ID'' and selecting ``Search.'' 
Select the link ``Submit a Comment'' that corresponds with ``DFARS Case 
2014-D016.'' Follow the instructions provided at the ``Submit a 
Comment'' screen. Please include your name, company name (if any), and 
``DFARS Case 2014-D016'' on your attached document.
    [cir] Email: osd.dfars@mail.mil. Include DFARS Case 2014-D016 in 
the subject line of the message.
    [cir] Fax: 571-372-6094.
    [cir] Mail: Defense Acquisition Regulations System, Attn: Ms. Amy 
G. Williams, OUSD(AT&L)DPAP/DARS, Room 3B941, 3060 Defense Pentagon, 
Washington, DC 20301-3060.
    Comments received generally will be posted without change to http://www.regulations.gov, including any personal information provided. To 
confirm receipt of your comment(s), please check www.regulations.gov, 
approximately two to three days after submission to verify posting 
(except allow 30 days for posting of comments submitted by mail).

FOR FURTHER INFORMATION CONTACT: Ms. Amy G. Williams, Defense 
Acquisition Regulations System, OUSD(AT&L)DPAP/DARS, Room 3B941, 3060 
Defense Pentagon, Washington, DC 20301-3060. Telephone 571-372-6106.

SUPPLEMENTARY INFORMATION:

I. Background

    Since 1997, sections 111 and 112 of the annual military 
construction appropriations acts restrict use of military construction 
funds for acquisitions exceeding certain dollar thresholds of 
architect-engineer services and military construction contracts to be 
performed in certain foreign countries. With some exceptions, these 
restrictions require award to a U.S. firm or provide a preference for 
award to a U.S, firm.
    These restrictions were first implemented as an interim rule in the 
DFARS under DFARS Case 1997-D307 (63 FR 11526) on March 9, 1998.

II. Discussion and Analysis

    This interim rule revises the DFARS to implement sections 111 and 
112 of the Military Construction and Veterans Affairs, and Related 
Agencies Appropriations Act, 2014 (Division J of Pub. L. 113-76). The 
only change required is to apply the restriction to contracts to be 
performed in the countries bordering the Arabian Sea (rather than the 
Arabian Gulf). These countries are India, Iran, Oman, Pakistan, 
Somalia, and Yemen.

III. Executive Orders 12866 and 13563

    Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess 
all costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). E.O. 
13563 emphasizes the importance of quantifying both costs and benefits, 
of reducing costs, of harmonizing rules, and of promoting flexibility. 
This is a significant regulatory action and, therefore, was subject to 
review under section 6(b) of E.O. 12866, Regulatory Planning and 
Review, dated September 30, 1993. This rule is not a major rule under 5 
U.S.C. 804.

IV. Regulatory Flexibility Act

    DoD does not expect this rule to have a significant economic impact 
on a substantial number of small entities within the meaning of the 
Regulatory Flexibility Act, 5 U.S.C. 601, et seq., because it applies 
to a very limited number of small entities. However, an initial 
regulatory flexibility analysis has been performed and is summarized as 
follows:
    This rule is necessary to implement the restrictions on award to 
other than U.S. firms when awarding certain military construction and 
architect-engineer contracts to be performed in countries bordering the 
Arabian Sea.
    The objective of this rule is to implement sections 111 and 112 of 
the Military Construction and Veterans Affairs, and Related Agencies 
Appropriations Act, 2014 (Division J of Pub. L. 113-76). This rule 
revises the preference for award to U.S. firms of military construction 
contracts that have an estimated value greater than $1,000,000 and the 
restriction requiring award only to U.S. firms for architect-engineer 
contracts that have an estimated value greater than $500,000, to make 
it applicable to contracts to be performed in a country bordering the 
Arabian Sea, rather than a country bordering the Arabian Gulf (as 
required in earlier statutes).
    This will only apply to a very limited number of small entities--
those entities that submit offers in response to solicitations for 
military construction contracts that have an estimated value greater 
than $1,000,000 and architect-engineer contracts that have an estimated 
value greater than $500,000, when the contracts are to be performed in 
countries bordering the Arabian Sea.
    There is a DFARS provision that requires for offerors to represent 
whether they are a U.S. firm. This rule impacts the prescription for 
applicability of that provision (changing Arabian Gulf to Arabian Sea).
    The rule does not duplicate, overlap, or conflict with any other 
Federal rules.
    This rule does not impose any significant economic burden on small 
firms. The offeror must represent if it is a U.S. firm, but in return 
for a positive representation is granted a preference for award of the 
contract. DoD did not identify any alternatives that could reduce the 
burden and still meet the objectives of the rule.
    DoD will also consider comments from small entities concerning the 
existing regulations in subparts affected by this rule in accordance 
with 5 U.S.C. 610. Interested parties must submit such comments 
separately and should cite 5 U.S.C. 610 (DFARS Case 2014-D016), in 
correspondence.

V. Paperwork Reduction Act

    The Paperwork Reduction Act (44 U.S.C. chapter 35) does apply, 
however, the rule does not impose any new information collection 
requirements to the paperwork burden previously approved under OMB 
Control Number 0704-0255, Defense Federal Acquisition Regulation 
Supplement (DFARS) Part 236, Construction and Architect-Engineer 
Contracts. The rule modifies the prescription for use of the provision 
at DFARS 252.236-7010, Overseas Military Construction--Preference for 
United States Firms, in an amount of less than 8 hours. Any change in 
the burden hours due to the changed prescription will be negligible.

VI. Determination To Issue an Interim Rule

    A determination has been made under the authority of the Secretary 
of Defense that urgent and compelling reasons exist

[[Page 44316]]

to promulgate this interim rule without prior opportunity for public 
comment. This action is necessary because this rule implements sections 
111 and 112 of the Military Construction and Veterans Affairs, and 
Related Agencies Appropriations Act, 2014 (Division J of Pub. L. 113-
76). Delay in making this change to the DFARS may result in (1) the 
appropriations act restrictions being incorrectly applied to military 
construction and architect-engineer contracts to be performed in 
countries bordering the Arabian Gulf and (2) possible misuse of 
appropriated funds if DoD fails to provide appropriate preference for 
U.S. firms when performing such contracts in the countries bordering 
the Arabian Sea. Issuance as an interim rule is necessary to ensure 
immediate preference for U.S. firms when awarding construction 
contracts to be performed in countries bordering the Arabian Sea, in 
order to comply with the law and support the U.S. industrial base.
    However, pursuant to 41 U.S.C. 1707 and FAR 1.501-3(b), DoD will 
consider public comments received in response to this interim rule in 
the formation of the final rule.''

List of Subjects in 48 CFR Parts 225 and 236

    Government procurement.

Amy G. Williams,
Deputy, Defense Acquisition Regulations System.

    Therefore, 48 CFR parts 225 and 236 are amended as follows:

0
1. The authority citation for 48 CFR parts 225 and 236 continues to 
read as follows:

    Authority: 41 U.S.C. 1303 and 48 CFR chapter 1.

PART 225--FOREIGN ACQUISITION

225.7014  [Amended]

0
2. In section 225.7014, amend paragraph (a) by removing ``Arabian 
Gulf'' and adding ``Arabian Sea'' in its place.

225.7015  [Amended]

0
3. Amend section 225.7015 by removing ``Arabian Gulf'' and adding 
``Arabian Sea'' in its place.

PART 236--SPECIAL ASPECTS OF CONTRACTING FOR CONSTRUCTION

0
4. In section 236.273, revise paragraph (a) introductory text to read 
as follows:

236.273  Construction in foreign countries.

    (a) In accordance with section 112 of the Military Construction and 
Veterans Affairs and Related Agencies Appropriations Act, 2014 
(Division J of Pub. L. 113-76) and similar sections in subsequent 
military construction appropriations acts, military construction 
contracts funded with military construction appropriations, that are 
estimated to exceed $1,000,000 and are to be performed in the United 
States outlying areas in the Pacific and on Kwajalein Atoll, or in 
countries bordering the Arabian Sea (i.e., India, Iran, Oman, Pakistan, 
Somalia, and Yemen)], shall be awarded only to United States firms, 
unless--
* * * * *

236.570  [Amended]

0
5. In section 236.570, amend paragraph (c)(1) by removing ``Arabian 
Gulf'' and adding ``Arabian Sea'' in its place.

0
6. Revise section 236.602-70 to read as follows:

236.602-70  Restriction on award of overseas architect-engineer 
contracts to foreign firms.

    In accordance with section 111 of the Military Construction and 
Veterans Affairs and Related Agencies Appropriations Act, 2014 
(Division J of Pub. L. 113-76) and similar sections in subsequent 
military construction appropriations acts, architect-engineer contracts 
funded by military construction appropriations that are estimated to 
exceed $500,000 and are to be performed in Japan, in any North Atlantic 
Treaty Organization member country, or in countries bordering the 
Arabian Sea (i.e., India, Iran, Oman, Pakistan, Somalia, and Yemen), 
shall be awarded only to United States firms or to joint ventures of 
United States and host nation firms.

236.609-70  [Amended]

0
7. In section 236.609-70, amend paragraph (b)(3), by removing ``Arabian 
Gulf'' and adding ``Arabian Sea'' in its place.

[FR Doc. 2014-17942 Filed 7-30-14; 8:45 am]
BILLING CODE 5001-06-P
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